In Short

The Situation: Currently, European law provides
only for representative actions to stop or prohibit infringements
of EU consumer law, but not for collective redress. As a result,
significant differences exist in the protection of the collective
interests of consumers throughout the European Union, as some
Member States have introduced actions for collective redress,
whereas others have not.

The Plan: The European Commission has tabled a
Proposal for a Directive on representative actions for the
protection of the collective interests of consumers
("Proposal"), currently under review by the European
Parliament. If the potential Directive enters into force, the EU
Member States will have 18 months to implement it into their
respective national laws.

Looking Ahead: If it is implemented, the
Proposal is expected to lead to an increase in the number of
enforcement and court cases seeking collective redress. As a
collateral effect, liability insurance premiums and costs for legal
expenses insurance will rise, if they are offered at all.

Currently, all Member States in the European Union provide for
representative actions to stop infringements of EU consumer law, in
accordance with EU Directive no. 2009/22/EC ("Injunctions
Directive"). By contrast, collective redress is available in
only 19 Member States, with
Germany planning to implement a mechanism offering declaratory
relief. In addition, only six of these Member States opted to
implement the full set of measures called for by European
Commission in 2013, and consumers must regularly prove the
infringement of their rights anew even if one court has already
found for another consumer.

The Proposal

Through the Proposal, the Injunctions Directive would be amended
by a collective redress procedure to create a one-stop-shop
framework for both injunctive and compensatory redress.

The scope of the Proposal is considerably broader (covering 59
instruments) than that of the Injunctions Directive (covering only
15 instruments), as it has been expanded to cover the scope of the
Regulation on Consumer Protection Cooperation, which was revised in
2017 to step up public enforcement of EU Law. Most importantly, the
Proposal also covers data privacy and additional economic sectors
such as financial services, energy, telecommunications, and
environment. The Proposal is without prejudice to existing redress
schemes, such as those applicable to damages from competition law
infringements (competition law remaining outside the scope of the
Proposal).

The main aspects of the Proposal are:

Actions can be brought by
qualified entities designated in advance by the Member States
or created on an ad hoc basis for a specific action. These
entities will be required to fulfill certain criteria, including
nonprofit and transparency requirements in relation to funding, in
an effort to avoid conflicts of interest and abusive
litigation.

The national court in an EU Member
State will be able to issue injunction orders as well as redress
orders in the form of monetary compensation, repair, replacement,
price reduction, contract termination or reimbursement, but not
punitive damages.

The Proposal applies an opt-out
principle to injunction orders, while opting out or opting in to
redress orders is left to the discretion of the Member States.

Member States should—where
consumers suffered comparable harm—consider the possibility
of enabling consumers to directly benefit from a redress order
after it was issued without being required to give their individual
mandate beforehand.

Companies may be required to produce
evidence contrary to their case, subject to rules on
confidentiality.

The limitation period for all
potential redress actions would be suspended by the filing of a
representative action.

If a court-approved collective
settlement is reached, consumers concerned could accept or reject
it.

Companies may be required to widely
publicize final injunctive or compensatory decisions and to reach
out to consumers individually to inform them of subsequent steps to
take.

Final decisions would be considered
as irrefutable evidence that an infringement occurred in the same
Member State and would benefit from a rebuttable presumption in
actions brought in another Member State.

Assessment

Collective redress is a growing trend both in terms of volume
and value of cases filed. Considering the breadth of the Proposal,
this trend is likely to be reinforced. In areas such as data
privacy, where recent global data breaches have already vividly
illustrated the legal implications under the existing frameworks,
EU consumers will now have the legal tool to bring cross-border
class actions against tech companies.

In contrast to, for example, the German approach, the Proposal
suggests that for certain cases, Member States should not even
require consumers to give a specific mandate to the qualified
entities for them to bring actions. That would open the possibility
for collaboration between plaintiff law firms, qualified entities,
and litigation funders to create a business model of consumer
collective redress in Europe.

It is still unclear to what extent pre-trial disclosure
requirements would be implemented, but there is a significant risk
that they will be expanded at least in those Member States that
currently only know limited disclosure.

Furthermore, the possibility for consumers to reject settlements
on collective redress and seek redress in individual proceedings
instead, added to the fact that the Proposal is without prejudice
to existing redress avenues, creates an environment in which each
infringement may lead to a plethora of actions, in plain
contradiction to the rationale of the Commission.

The discretion given to consumers in this respect, coupled with
the contemplated opt-out system where the number of claimants is
not known, makes any risk assessment very difficult for companies.
This necessarily has an impact on defense strategy, in particular
on whether or not these representative actions should be
settled.

Three Key Takeaways

In the midst of several mass harm
scandals, the Proposal aims to endow EU consumers with the first
horizontal collective redress tool under EU law. Consumers will be
given the ability to seek injunctive and compensatory relief in any
area in which they have suffered harm.

The low threshold to bring cases, in
particular without specific mandates of consumers concerned, opens
the door to a class action litigation industry in the European
Union.

While the Commission's Proposal
is under review by the European Parliament and the Member States,
companies may want to make their voice heard in the legislative
process, to point out the imbalances and uncertainties of the
Proposal, which may leave both companies and consumers worse
off.

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

With Christmas just around the corner, a recent UK Court of Appeal decision will serve as a timely reminder to employers that they can be held vicariously liable for the conduct of employees at social events ...

This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).

Email Address

Company Name

Password

Confirm Password

Position

Mondaq Topics -- Select your Interests

Accounting

Anti-trust

Commercial

Compliance

Consumer

Criminal

Employment

Energy

Environment

Family

Finance

Government

Healthcare

Immigration

Insolvency

Insurance

International

IP

Law Performance

Law Practice

Litigation

Media & IT

Privacy

Real Estate

Strategy

Tax

Technology

Transport

Wealth Mgt

Regions

Africa

Asia

Asia Pacific

Australasia

Canada

Caribbean

Europe

European Union

Latin America

Middle East

U.K.

United States

Worldwide Updates

Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.

To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access

No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq

No, please do not send me promotional communications from Mondaq

Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions